I’ve heard a LOT of talk lately from folks worried about inflation. I just don’t see it. When I look across the asset markets, in fact, all I can see, outside of stocks, are signs of deflation. Time for a little chart dump:

I don’t care what they say about the Baltic Dry Index and structural problems in the industry this chart represents the price for shipping goods overseas and it ain’t bullish:

bdi

Dr. Copper (PhD in Economics) has gotten absolutely hammered lately. Why is nobody talking about this? Typically, this would be a very bearish sign for the economy and risk assets.

copper

This next chart plots the price movements of the Commodities Tracking ETF (DBC). Since the beginning of February it’s been almost straight down. All I can think of when I see this chart is what the hell is demand must be declining dramatically.

dbc

Does gold look like it’s worried about inflation?

gold

A big reason for the positive economic surprises we’ve seen lately is renewed demand for housing. Lumber prices have been a good proxy for this but they look now like they’re starting to roll over.

lumber

Oil is another commodity that’s taken a beating lately.

oil

TIPs buyers sure aren’t worried about inflation.

tips

The yield on the 10-year treasury has dropped almost 40 basis points over the past month!

tnx

The homebuilder ETF, a sector that has been leading stocks over the past few months, looks like it’s breaking it’s uptrend.

xhb

All in all, I don’t see any signs here that suggest inflation is going to be a problem in the near future. All signs, from commodities to interest rates, point to renewed deflation. If housing demand begins to wane again I think we should all be worried about the economy.

But let’s take a look at some equity bellwethers for further clues. Alcoa, a classic economic bellwether, looks like death. It’s bumping along near it’s 52-week low.

aa

Caterpillar, another decent proxy for economic activity, doesn’t look much better.cat

Fastenal, which gives us a window into the housing recovery, looks like it’s rolled over pretty convincingly.

fast

Fedex has quickly given back nearly all of its post-fiscal cliff gains.

fdx

JP Morgan Chase, one of the largest banks in the world has formed a clear head and shoulders top suggesting the rebound in financial activity maybe running out of steam.

jpm

LVMH, a proxy for luxury goods, doesn’t inspire much confidence in that sector.

lvmh

Finally, US Steel looks even worse than Alcoa.

x

Are you worried about deflation yet? Good – you should be.